The moderator introduced me as an economist, which is too much of an honor for me. I recently received a letter from a young man in the Economics Department of Beijing University, in which he quoted the department chair as saying, “China can lay no claim to any economics theories of its own,” because all the theories floating around are taken from abroad. You can also read on the Internet about a group of distinguished economists gathering at Fudan University, Shanghai, who also asserted that China has not yet developed any economics theories of its own. As I see it, the very fact that these economists came up with such a conclusion is, by itself, a sign of significant progress. Now, if this is true, how can there be any Chinese economists to speak of? It thus follows that it’s misleading to call me an economist. I am, in fact, nothing more than a researcher who works with his feet a lot of the time. Lest a solemn lecture should draw collective yawns in this soporific sunny mid-autumn afternoon, please allow me to avail myself of this 20-minute slot to tell you a few stories.

The Moral of the Four Stories:

The first story took place in August when I was on an academic exchange program in Mexico, where I happened to witness the unfolding of a major event. In the global combat against terrorism, the image a terrorist evokes is a face mask with only two eyes showing through. When I was in Mexico, it so happened that the Zapatista National Liberation Army soldiers wearing precisely such masks were trying to establish local self-government. So, I took a trip to a hilly region under their control. I later published an article on that experience in the 9th issue of the journal China Reforms, under the title of “Meeting the Masked Soldiers Face to Face.” It’s also available on the Internet, but I’m not going to dwell at length here on the masked soldiers themselves. You can read about them on your own if you’re interested.

What I want to say is that when I found myself in the midst of thousands of such mask-wearing fighters and ten times as many Indians with red scarves over their heads, I was totally free of fear. I was led by a guide to the Lacatonia virgin forest bordering Guatemala and Mexico, where I then took a canoe to Zapatistas-controled areas inhabited by native Indians. All along the way, I saw them engaged in slash-and-burn farming, which I thought, at the time, was of course detrimental to the environment. But, when I was living among them and unable to get a wink of sleep from the mosquito and flea bites, I set about thinking, why would they want to ruin their environment?

Why have the native Indians changed their ancient tradition? They have always been perceived as people who live in harmony with nature, who don’t kill more animals than they have to, who do no damage to the ecological environment, who take from nature only what is sufficient for their most basic needs. This is a tradition that has been alive and well for thousands of years. But why are they now engaged in slash-and-burn farming, cutting trees on steep mountain slopes? This so-called economist had a hard time trying to puzzle it all out. After my return, I gave a talk at the Latin-American Institute of the Social Sciences Academy, the main thrust of which will be published in the next issue of Gaige neican. Similar points of view can be found in the 9th issue of China Reforms. If you can’t get hold of a copy of Gaige neican, it’s available on the China Reforms website.

In short, I believe that this involves a major systemic problem, but what is it?

In order to learn more about “Latin-Americanization,” I undertook many trips, four of which to Mexico alone. I didn’t go to big cities for talks with scholars there, but stuck to my way of doing things in China and went to rural areas to stay with the farmers.

Let me tell you about an interesting anecdote from a previous trip. I asked a tall and portly farmer, “In which state is your farm located?” He replied, “You asked the wrong question. You should have asked me how many states are in my farm!” He proudly told me that his farm was larger than his home state. With such a large farm, what problems do we see?

If you believe that land privatization is the right way to go to bring about agricultural marketization, it follows that farmers must continuously expand their farms in order to cope with the ever-increasing capital needs and technological investment. This is what happens in Latin America. In Europe, the US, and Japan, the governments will increase their subsidies if the farmers can’t afford the cost. Inevitably, in a fully competitive agriculture on a global scale, a farm has to be expanded to stay competitive. But, under the system of land privatization, larger farms are bound to destroy small ones in the pursuit of expansion.

Who are the small farmers in Mexico? They are the native Indians, who have lived in harmony with nature for thousands of years. In an age of globalization dominated by the law of the market favorable to competitive expansion of the farm, small farms inevitably fall victims to large farms. So, the Indians are left with no other means of livelihood but cutting trees in virgin forests in a reversion to the slash-and-burn way of farming practiced by their ancestors. At the same time, they also need cash to meet medical, educational and other expenses indispensable in a modern society. This will necessarily lead to damage of the natural ecological environment. But what can you do about it? They have to survive. According to Latin American researchers, during the 300 years of colonization, about one hundred million Latin American Indians were wiped out. Things were even worse in North America. In 1992, the US declared that native Americans had ceased to exist as a race, because there were only 420,000 of them. In Mexico, however, especially in states like Chappas, Indians still account for an overwhelming majority of the population.

This story tells us that if you want to protect the ecological environment, you should, at the very least, prevent land privatization. Mainstream economists tell us that only through land privatization can Chinese agriculture join international competition. As I see it, even if Chinese land is privatized ten thousand times, we still won’t be a player in international competition. When our officials and researchers go to the US to see their farms, they usually visit big modern farms, to see the GPS systems and to ooh and aah over the large-scale mechanized operations. None of them goes to medium and small farms, as I do, to find out the reasons for their bankruptcy. Why do American farmers go bankrupt? The main reason is that the farms are not large enough! Only farms averaging over 400 hectares generate profit! With land averaging only 0.5 hectares per farm in China, when will we ever reach break-even level?

It is now “politically correct” in China to get on the bandwagon of globalization and market economy, and make it an ideological issue in a fundamentalist approach. I won’t dwell at length on this. I only wish to emphasize one point: If you stay detached from ordinary folks at the grass-roots level, environmental protection and sustainability of resources will remain but a pipe dream.

The second story is about my home province. The mountainous regions of Guizhou are known for their severe soil erosion, a problem that has worsened in recent years. Many deeply concerned international organizations, including NGOs, are engaged in poverty-alleviation efforts in Guizhou. I wonder if they understand why poverty-stricken Guizhou farmers have to do their farming on mountain slopes too steep even for farm oxen? Only humans can climb up on them, to dig some soil and plant some corn in the crevices of the rocks. Do you think they enjoy doing that?

Guizhou people will tell you a story about a “straw-hat field.” A man was given 28 pieces of land. So, he climbed up the slopes to till them. After doing 27 of them, he couldn’t, for the life of him, find the last one. But when he picked up his straw hat, he saw that there it was, all covered up by his hat! This tells you how bad things are.

No matter how the government emphasizes that no farming should be done on mountain slopes, they still do it, but do they enjoy doing that? No! Guizhou was the first to implement the policy of contracting out land, a policy that is supposed to remain unchanged for 30 years. Why was this done? Because of the severe lack of land resources. So, land was all contracted out as early as in 1978 in Guizhou, the first province to do so. At the time, cultivated land averaged 0.78 mu per capita in Guizhou, lower than the 0.8 mu laid down by the UN as the minimum level for survival. Twenty years being one generation, what are the new one-and-a-half generation in 30 years’ time supposed to eat? Where can they go for food? And how old now are those born at that time? They are now over 25 years old and each may have several children. Across the entire country, it was not until the end of the 1990s that the 30-year policy was put into effect. It has recently been enacted into law, and there is an abundance of research findings in this regard. But has anyone seriously studied the situation in Guizhou, where the policy originated? Has anyone drawn a lesson from that experience despite overwhelming public opinion to the contrary?

Now let’s look at the facts. Those farmers without other means of livelihood have to climb up the slopes and make full use of what little topsoil there is. Please think about this in connection with my first story-the one about Mexican Indians. What are the systemic problems behind these stories?

In our eagerness to raise farmers’ income by accelerating urbanization, we need to look at other countries in the world. Mexico’s urbanization rate is 80%, whereas ours is only 40%. Mexico’s per capita income had once hit $6,000, whereas ours is only $1,000. And yet, they still have farmers who go under. According to government statistics, their poverty rate is 34%, but researchers put it at over 50%, which is far higher than ours. They still have farmers’ rebellions, battles waged by the mask-wearing combatants I mentioned earlier, and they still have slash-and-burn farming and native Indians have had to abandon their old tradition of living in harmony with nature. This is all due to problems in the system.

Let’s come back and take a look at ourselves. A more pressing question is, how should China steer clear of such systemic problems?

This is where the story about Guizhou comes in. How did the straw-hat field come about? Why do farmers have to work on the slopes? All this goes to show that we have our problems. Our friend Chen Peisi who spoke this morning said that some of our policies are detrimental to environment protection. I think that those two stories, one about another country, one about our own, can serve to illustrate his well-taken point.

My third story happens right here. People complain about the traffic jams in Beijing, about car emissions, about the quality of Chinese-made cars, about the highways and inadequate public transportation. I lived in Manhattan for about six months and I did some driving there. I wondered why there is only one highway around Manhattan. Do we have as many cars in Beijing? We now have six beltways around Beijing, but they still don’t meet our needs. Why? Again, I put the blame on the system.

What are systemic problems? The government’s monopoly on the requisition of land is one of them. Are there any discussions of urban construction structures under such a system? This is a system that has given rise to the so-called “enclosures” that look like enclosures under a feudal system. Thousands of buildings have been grouped into “enclosures” that forbid vehicles to drive through or even to park. All vehicles have to take certain roads designated for vehicle circulation. Beijing University once declared that it would admit vehicles on its campus and almost just as soon closed its gates again.

If there is no government monopoly on land requisition, no real estate developer can afford to acquire too much of expensive urban land. That’s why you don’t see such “enclosures” in New York. Vehicles can go through Central Park and drive by the buildings. But in our case, vehicle circulation is limited to the highways, a deplorable consequence of the “enclosures.” And every work unit wants to turn its front yard into its own parking lot. This is the mentality of landowners, a mentality that has nothing to do with modern urbanization.

Now, the fourth story. It’s again related to urban life. City people talk non-stop about environmental protection, but do you know how many disabled children are born each year in the Beijing Children’s Hospital? And the numbers go up each year. Why? Because of the excessive application of pesticides and fertilizers in the fields. Our use of chemical fertilizers per mu is 2 to 3 times that of the US. So, those in the know often say that they dare not buy the lush, alluringly green vegetables in the markets because of the nitrous acid, a carcinogen, contained in them. City people must not believe that farming has nothing to do with them. The excessive use of pesticides and chemical fertilizers ruins your lives as well. The lady from Hong Kong who spoke this morning said that being a new mother, she is worried about her child’s future. Her child may still be relatively healthy, but so many of us are all eating agricultural products with residues of pesticides and chemical fertilizers. Why is the pharmaceutical industry prospering? Because we fall ill too easily and too often! The disabled population has grown to 60 hundred million. The damage to resources environment is one of the causes.

Therefore, in their pursuit of greater development, city people should pay more attention to how the 900 million farmers are doing. Farmers in most developing countries constitute the most vulnerable group. If they are driven desperate, city people will have to suffer the consequences. And cities will be places where things start to go wrong!

Rural Development and Environmental Protection.

I told you these stories and their morals in order to get at what I plan to do. I am now doing research in rural development, hence the title of my speech today-Rural Development and Environmental Protection. In fact, I also wish to emphasize that environmental protection must be integrated with rural culture.

The mainstream theories, culture, and public opinion of our society tell farmers to get rich. Those who get rich are heroes, those who don’t are losers. But I want to alert farmers to the fact that what the so-called modernization and globalization ideology can offer them is only a pancake painted on a wall. It is out of their reach, and if they try to sink their teeth into it, they’ll only end up getting themselves laughed at.

The problem facing us is basically the same as 25 years ago: how to be realistic and truthful. What we have now are 900 million peasants, 230 million of whom are small farmers, and 0.5 hectare on average per family. These are facts that we should base ourselves on. When we emphasize environmental protection and environmental culture, what does all this mean to the farmers?

The environmental culture in the global context is a non-mainstream “culture” in the first place, something probably hard to understand for the wealthy who deal in stocks. I get involved in this culture in order to tell our Chinese farmers that Western-style modernization is not for us. That is a trend that we can ill afford to follow. Our country being a super-populous country with a deplorable lack of resources, we would do well to be realistic. Bureau Director Xie’s speech this morning put it clearly: We import one third of the oil and more than a half of the nonferrous metal we use. And let me take up his point and say that such an approach will lead to excessively intensified coastal industrialization and heavy pollution, which means that if you don’t get SARS today, you’ll get some other kind of disease tomorrow. That’s for sure, and future generations will have to pay for it, too.

The problem is that city people have already accepted such a pattern of modernization, and all too few people are doing much independent thinking. What I say here today will surely be criticized by those not inclined to independent thinking. But being a researcher on rural questions, I’d rather get started on rural development than wait patiently for those city people to put their brains to better use.

What shall we tell the farmers at the grass-roots level? First, don’t seek modern energy resources. Don’t think that electricity is the way to go. Let’s use more natural energy resources like biogas, water, wind and solar energy which would have been novelties one generation ago. And I hope our friends in the cultural, especially the TV and movie circles, can do more to raise awareness in this regard, so that our farmers will not imitate the wasteful ways of the West. In the old days, those farmers who did things harmful to the environment were not guilty of anything worse than burning up firewood. They never made use of the high-cost stuff popular in the cities. They never wasted resources but consumed what was produced in the fields and recycled waste back into them. Second, use less chemicals. When I was in high school, we once listened to a talk by a farmer from All Seasons People’s Commune. He said, “Why do you think bok choy sold in Bejing’s markets tastes so good? It’s because the bok choy was fertilized by manure collected from the city of Beijing.” In those days, the plentiful manure from the cities was put to good use by the people’s communes in the suburbs. But now, the manure is discharged into the rivers and seas. The farmers resort to chemical fertilizers instead. How good can the vegetables taste? Therefore, only if the farmers resume their old farming tradition can what they produce be palatable and not injurious to the health of city kids. Look at all the fat kids we have now in Beijing! Little girls have hair on their lips! And they have American-style junk food to thank for it! So, we must tell farmers to take up organic farming, to use natural manure and living organisms against plant diseases and insect pests, and to raise pigs. After all, organic farming had always been a Chinese tradition. Grain production and pig-raising also meet the needs of price risk cycles. When developing distinctive Chinese economics theories, researchers can very well study the risks involved in balanced grain-cultivation and stock-raising as practiced in small-scale farming.

The third thing I want to do is to organize the farmers and, in the parlance of the World Bank development report, transform human resources into social capital. Since many researchers have courageously admitted that there are no Chinese economics theories, let us develop some in the light of our lack of resources and explosion of population. They’ll be theories under the unique system of introvert industrial accumulation. Of course, there should also be a study of environmental protection that matches such a system. We must tell our farmers that, first, China’s resources will always be inadequate. Even if our urbanization rate rises to over 55%, there’ll still be 7 to 8 hundred million people living in the rural regions, and most farmers will not be able to change substantially their status quo. This is a fundamental and long-standing problem. Second, the 500-million-strong agricultural labor force must not, on any account, be treated as a burden and driven into a slave labor market in a race to the bottom. In conditions where there is an absolute surplus and an infinite supply of labor force, they will not make much after a whole year of work. Hence the need for the government and NGOs to help farmers organize themselves. What can rural surplus labor force be used for? For changing the family and the villages, thus turning human resources into social capital through collective labor.

Some time ago, during the SARS outbreak, many newsreporters came to talk with me. I asked them if they remembered how the problem of schistosomiasis had been solved. It was solved thanks to the coordinated efforts of 600 million peasants in farmland water control projects, and in digging ditches and filling pits. How can a bunch of medical workers solve the problem with their medicine? No one in this world can solve the problem of environmental protection for 900 million farmers. That is why we need to revive our agricultural civilization with its thousands of years of history, and ease the plight of the farmers through the rehabilitation of the communal group culture. By establishing rural development centers, we will be organizing NGOs, volunteers, and people in the rural regions who share such thinking, to fill the gap in rural organization, and to tell the farmers how to organize, develop, accumulate, and face reality.

We have joined forces with several NGOs and, in cooperation with local farmers, established recently, in the very place in Hebei where Mr. Yan Yangchu was engaged in rural development in the 1930s, a “Yan Yangchu Rural Development Institute.” We raised only 60,000 yuan for the start-up expenses. So, we are virtually starting from scratch. We plan to develop gradually through the self-reliant efforts of volunteers and the farmers. The Institute will start enrolling students next year. The volunteers and farmers will, in their interactive exchanges in the work process, feel the power of cooperation as a group. In addition, their productive life in the Institute will be environmentally friendly, eco-friendly, and organically cyclical, which means that we have sustainability in mind. This will be the only way to achieve the cyclical economy mentioned by Bureau Director Xie and eco-culture mentioned by Bureau Director Pan. The concept of eco-culture contains a lot that is in our Daoist and Confucian tradition. And where do they originate? From, of course, a small-farming society with thousands of years of history. So, this is what I am involved now: rural development and environmental protection, as a story derived from four stories.

Thank you.